When the Levee Breaks: The Impact of Floods on Educational Outcomes in China

Abstract

This study examines the impact of flooding on human capital investment in China. We find that early flood exposure significantly reduces educational attainment and high school enrollment in rural areas, particularly in regions with lower flood risk, non-detention basins, and counties without dams. Income and opportunity cost effects contribute to these outcomes, with floods disproportionately affecting students from low-educated and poor households. The emergence of low-skilled firms post-floods further exacerbates the negative effect due to new job opportunities. A cohort difference-in-difference analysis of the 1998 China flood reveals that affected children under 15 in flooded areas experienced a 0.16 years reduction in education. Our findings highlight the need for flood policies that mitigate the long-term adverse effects on human capital accumulation in China.

Keywords: Floods, Human Capital Investment, Opportunity cost, Income effect